A barrel of US WTI crude fell $3.33, or 3%, to close at $106.19. Earlier in the day, it hit a low of $101.53 a barrel, a level not seen since May 11.
On Wednesday, investors focused on the path of interest rate hikes in the United States that seek to cool inflation, but could derail the recovery of the world’s largest economy and curb demand for fuels.
Oil trimmed losses during the session after Fed Chairman Jerome Powell promised a “general approach” to reduce inflation and reiterated that increases in the central bank’s monetary policy rate would be appropriate, with a pace that It will depend on the economic outlook.
“Powell seemed to change the mood of the market, appearing confident in the US economy,” said Phil Flynn, an analyst at Price Futures. “Your words from him have reassured the market and pushed prices to bottom in the short term.”
While, US President Joe Biden called on Congress to pass a three-month suspension of the federal gas tax to help combat record pump prices and provide temporary relief to American families this summer.
While lower pump prices could actually boost fuel demand and drive crude prices higher again, PVM analyst Stephen Brennock believes traders may be concerned that the Biden administration will take more action to cool off high energy prices.
Both Democratic and Republican lawmakers have expressed reluctance to suspend the federal gas tax.
The White House called the chief executives of seven oil companies to a meeting Thursday to discuss ways to increase production capacity and reduce gasoline prices, which are currently hovering around $5 a gallon.
Source: Ambito
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